Global Economic Condition
Great Recession of 2008-09 has slowed the growth of world output, especially in the developed countries like EU, USA, Japan and Canada etc. In the developed countries unemployment remains high at the rate of nearly average 9 per cent again income of the employed people remain stagnant1. Although the great Recession is on the way of recovering, more and more worker remain out of the job for a long time, especially young workers, medium-term growth prospects also suffer because of detrimental effect on worker’s skill and experiences. It is known that European Union and the United States of America form the two largest economies in the world, but due to the Great Recession their economic condition are twined together. The problems are not bounded in themselves; they also affect deeply the developing countries and spread to the Great Recession. So from the global recession of 2009 the developing countries, like South Asian and central African countries would be hit through trade and financial channels. Surrounded by great uncertainties, it further assumes that the monetary policies among major developed countries will remain accommodative. It is also assumed that the key commodity prices will fall down a little from the current level of prices, again exchange rates among major currencies will fluctuate around the current levels of exchange rates. Gradually the condition is recovering. According to the United Nations, WESP2, the growth of world gross product (WGP) is forecast to reach 2.6 per cent for 2012 and 3.2 per cent for 2013. Economic condition of developing countries are expected to support the world economy as in the developing countries Gross product is growing on average 5.6 per cent in 2012 and 5.9 per cent in 2013 while whole world experienced the great recession. This is well below the pace of 7.5 per cent achieved in 2010, when the output growth among developing countries in Asia and Latin America such as Brazil, China and India have been particularly in robust situation. Economic growth in developed countries has fall down to 1.3 per cent in 2011 which is down from 2.7 per cent in 2010, again at the rate of 1.9 per cent in 2013 and 1.3 per cent in 2012. At this stage it is expected that the unemployment rate remain high which is nearly 7.9 per cent. In the low-income countries it has been seen that the income growth has showed from 3.8 per cent in 2010 to 3.5 per cent in 2011. But the poorer countries show income growth which is better from 2011 in the fiscal year of 2012 and 2013. Economic condition of these countries varies greatly over the year. Bangladesh and several of the Least Developed Countries in East Africa are showing strong growth in per capita income, although there is adverse situation due to political instability. The least developed countries continue to perform growth in economy. It is mentionable that while the world economic growth declined greatly in 2011, LDCs showed only mild slowdown from 5.6 per cent in 2010to 4.9 per cent in 20113. After the three years of Great Recession, the unemployment rate averaged 8.6 per cent in the developed countries in 2011 but this rate was 5.8 per cent prior to the economic crisis in 2007. In Spain, the unemployment was 20 per cent which was the largest unemployment rate in developed countries. But in the United States of America unemployment rate remain 9 per cent since 2009.
From the year 2000 to 2013, the growth rate of GDP per capita by the level of development of different countries such as least developed, low income and high income countries are presented below graphically.
Sources: UN/DESA and Project LINK. (a Estimates. b United Nations forecasts)
In order to make the global economy recover, balanced and sustainable some policies are suggested by WESP4. As the first step, developed countries should be cautious to recovery and prevailing high level of unemployment. Secondly the subsequent economic...
Please join StudyMode to read the full document